The results of the eleventh issue of the study “PV Grid Parity Monitor”, carried out by the consulting firm CREARA, sponsored by BayWa and Exosun, and in cooperation with Copper Alliance, shows that photovoltaic (PV) generation parity (the moment when profitability requirements of PV investors are completely fulfilled with wholesale electricity prices) is an economic reality in Morocco and some of the PV plants developed in Honduras. The geographic scope of the analysis has been expanded as the United Kingdom has been included in this new edition.
While the other Grid Parity Monitor (GPM) issues focus on residential (3kW) and commercial (30 kW) PV installations for self-consumption, this report covers large scale PV plants. The plant considered in the analysis has an installed capacity of 50 MWp using a single-axis tracking system (except for the United Kingdom, where a fixed structure is assumed) and is developed under a project finance scheme. The GPM report analyzes the competitiveness of the PV technology and assesses local regulation in a location with high irradiation in 9 countries: Chile, Honduras, Italy, Mexico, Morocco, South Africa, Turkey, the United Kingdom and USA (Texas).
An outline of the electricity market is presented to allow full understanding of PV generation parity proximity in each of the analyzed countries. This GPM report provides a summary of the market situation so that the reader is able to identify which electricity prices should be chosen to evaluate PV generation parity and which are the main difficulties a PV plant will face in the considered market.
The analysis shows that currently only Morocco has achieved a full generation parity situation. In Honduras the parity depends on the installation, while Chile has seen its PV installations being pushed out of parity because of the massive decrease in the wholesale prices. PV technology costs, however, have continued falling since the previous issue of the GPM utility-scale. As explained by José Ignacio Briano, Director of the Consulting Department at CREARA, “the price of PV modules, which is quoted in dollars, has continued decreasing in the last semesters across all countries included in this analysis, but a stronger dollar has reduced the impact of this decrease measured in local currencies and compared to increasingly low electricity reference prices.”
The fact that generation parity has not been reached in a country does not imply that utility-scale PV plants will not be built. Others reasons that might create a favorable situation and therefore may trigger such an investment are, for example, a RPS (Renewable Portfolio Standard) system, a FiT program, a convenient PPA scheme which has been granted to the investor or the perspective of increasing electricity prices over the medium and long-term. Given the volatility in many of the wholesale markets and the fast decline of PV prices (which are much higher in the utility segment than in residential or commercial segments), the competitiveness of utility-scale installations should be analyzed over time, particularly since the reduction in electricity prices seen this year could be interpreted as a short-term deviation in a long-term trend of increasing electricity prices.
